Why Are People Spreading Falsehoods About Bitcoin’s Water Use?

By
now
you
may
have
heard
some
of
the
fuss
around
a
commentary

published
in
a
scientific
journal
that
allegedly
details
how
Bitcoin
is
destroying
the
environment
by
consuming
too
much
water.
The
commentary
has
been
picked
up
and
spread
around
by
mainstream
media,
despite
its
multiple
factual
and
mathematical
inaccuracies.

This
may
trigger
some
eye-rolling
and
“here
we
go
again.”
For
years,
we
have
had
to
work
hard
to
debunk
the
false
claims
about
Bitcoin’s
energy
consumption,
which
ranged
from
unhinged
declarations
that
Bitcoin
mining

would
use
up
all
the
energy
in
the
world,
to
more
understandable,
albeit,
lazy

confusion
about
what
a
Bitcoin
transaction
even
is.
We
more
or
less
won
that
–
few
regulators
these
days
insist
Bitcoin
mining
should
be
banned
because
of
its
environmental
impact,
instead
pivoting
to
cite
its

illicit
use
as
the
main
reason
for
outright
rejection.

Noelle
Acheson
is
the
former
head
of
research
at
CoinDesk
and
Genesis
Trading,
and
host
of
the
CoinDesk
Markets
Daily
podcast.
This
article
is
excerpted
from
her



Crypto
Is
Macro
Now


newsletter,
which
focuses
on
the
overlap
between
the
shifting
crypto
and
macro
landscapes.
These
opinions
are
hers,
and
nothing
she
writes
should
be
taken
as
investment
advice.

It’s
almost
as
if
mainstream
media
has
been
searching
for
another
platform
from
which
to
justify
its
judgemental
condescension.
To
this
eager
audience,
data
scientist
Alex
de
Vries,
founder
of
Digiconomist,
delivered
a
commentary
titled:
“Bitcoin’s
growing
water
footprint.”

It’s
a
clever
idea,
if
your
aim
is
to
reverse
the
growing
global
acceptance
that
Bitcoin
mining

can
be
a
positive
environmental
force.

Climate
fear
mongering
has
been
a
tool-of-the-trade
for
some
time
in
the
clicks
industry,
and
it
is
timely
given
the
ongoing
COP28
summit.
Combine
some
existential
doom
with
a
scary
new
financial
system
that
no-one
can
seemingly
control,
and
the
mainstream
press
will
of
course
lap
it
up.

What’s
more,
the
new
focus
is
particularly
topical
–
water
issues
are
now
a
regular
feature
in
my
daily
reads.
This
weekend,
for
instance,
economist
Mariana
Mazzucato
and
others
published
a
piece
in
Project
Syndicate
called
“Water
and
the
High
Price
of
Bad
Economics.”
On
Friday,
the
UN
published
its

Global
Drought
Snapshot
with
unsurprisingly
chilling
statistics.
On
Thursday,
Bloomberg

reported
on
the
drought
in
the
Amazon,
last
week
The
Economist

covered
the
drought
in
Panama.
I
could
go
on,
but
you
get
the
picture.

It’s
perhaps
even
more
ingenious
in
that
the
implied
scarcity
is
in
a
different
category.
The
“too
much
energy”
debate
was
pretty
easy
to
debate
philosophically
–
after
all,
we
can
make
more
energy,
either
by
extracting
it
from
the
ground
or
better
harnessing
the
sun’s
rays
(to
choose
two
examples).
Energy
is
not
a
zero-sum
game.
Water,
for
now,
is.
If
indeed
Bitcoin
is
consuming
“too
much”
water,
that’s
less
water
for
thirsty
citizens
or
essential
agriculture.
Running
out
of
water
feels
more
fatal
than
running
out
of
energy.

And
we’ve
all
seen
how
the
fireball
topic
of
climate
destruction
can
be
effectively
used
to
alienate
precisely
those
that
could
most
benefit
from
Bitcoin:
the
younger
western
demographic,
who
are
not
as
invested
in
trusting
the
current
system
as
older
generations,
and
who
really
should
be
thinking
about
how
to
save
amid
the
currency
debasement
that’s
coming.

Now,
I’m
not
suggesting
that
de
Vries
is
part
of
a
coordinated
effort
to
discredit
the
crypto
ecosystem,
at
a
time
when
official
recognition
of
its
environmental
potential
was
starting
to
consolidate
and
legacy
finance
was
getting
ready
to
embrace
the
opportunity
to
service
a
greater
range
of
Bitcoin
products.
No,
I
wouldn’t
do
that,
I’m
not
a
conspiracy
theorist.

But
you
must
admit
the
timing
is
convenient,
and
it
is
remarkable
how
quickly
mainstream
media
picked
up
a
comment
in
an
obscure
scientific
journal
that
I
am
sure
is
not
part
of
the
journalists’
regular
morning
reads.
Oh,
and
did
I
mention
that
Alex
de
Vries
works
for
the
Dutch
central
bank?

Now,
on
to
the
main
things
that
de
Vries
gets
wrong.

This
part
is
important,
because
it’s
going
to
be
up
to
all
of
us
to
patiently
explain
to
anyone
who
brings
this
up
why
the
data
and
the
conclusions
are
factually
incorrect.

First,
de
Vries
attempts
to
calculate
the
water
consumption

per
transaction.
This
shows
either
a
misunderstanding
of
how
Bitcoin
works
or
a
wilful
misdirect,
and
since
de
Vries
has
been
researching
Bitcoin
energy
use
for
at
least
five
years
(that
I’m
aware
of),
I’m
guessing
it’s
the
latter.

Bitcoin
miners
in
aggregate
pay
for
electricity
to
process
blocks
of
transactions,
and
the
number
of
blocks
is
predictable
(one
every
10
minutes
or
so).
The
calculable
metric
is
consumption
(of
electricity
or
water)

per
block.
Each
block
can
contain
one
or
thousands
of
transactions,
depending
on
demand
and
size
(in
terms
of
memory
consumption).
Currently,
there
are
around
3-4,000
transactions
per
block,
but
earlier
this
year,
the
number
was
more
like
1,000.

And
each
transaction
can
contain
one
or
millions
of
payments,
which
de
Vries
neglects
to
explain.

Second,
de
Vries
sums
together
indirect
water
use
via
electricity
consumption,
and
direct
water
use
via
rig
cooling
methods,
asking
us
to
believe
that
adding
them
together
produces
a
useful
figure.
Water
used
on-site
can
be
saved
for
other
uses
should
the
Bitcoin
miners
switch
off.
Water
used
by
power
generators,
not
necessarily.
These
are
two
very
different
types
of
water
use,
which
cannot
be
lumped
into
one
convenient
yet
irrelevant
measure.

Furthermore,
the
direct
use
is
not
necessarily
a
water
“cost,”
as
much
of
the
water
in
cooling
methods
is
re-used.
And
the
indirect
consumption
(by
the
electricity
source)
is
also
not
technically
a
“cost”
since
much
of
the
water
used
by
thermal
power
plants
is

returned
to
its
source
after
cooling.
The
water
used
by
hydroelectric
generation
would
not
be
significantly
impacted
should
Bitcoin
miners
switch
off.

Third,
the
math
is
based
on
very
tenuous
assumptions.
The
method
de
Vries
uses
is
to
estimate
Bitcoin
mining’s
energy
consumption
(based
on
data
from
the

Cambridge
Bitcoin
Electricity
Consumption
Index),
apply
an
approximate
geographical
distribution,
factor
in
the
average
energy
mix
by
region
and
then
extrapolate
the
water
used
by
each
type
of
energy.

Apart
from
the
margin
of
error
in
each
of
those
factors,
this
method
assumes
that
all
miners
are
representative
of
the
grid
mix
in
their
jurisdictions.
This
is
not
so
–
miners
tend
to
concentrate
around
lower-cost
sources
since
energy
is
their
main
continuing
expense,
which
skews
the
relevant
mix.
What’s
more,
miners
increasingly
co-locate
with
energy
producers
to
reduce
waste
and
take
advantage
of
stranded
power.

And
the
representative
geographical
mix
was
based
on
out-of-date
information.
Kazakhstan,
for
example,
is
given
as
one
of
the
top-three
global
mining
jurisdictions.
That
may
have
been
the
case
in
2021,
but
today,

there
are
very
few
Bitcoin
miners
in
Kazakhstan,
as
the
industry
was
hit
by
repeated
internet
outages,
energy
shortages
and
regulatory
barriers.

And
yet,
we
are
told,
in
a
scientific
journal,
that
each
Bitcoin
transaction
consumes
enough
water
to
fill
a
small
swimming
pool.
This
is
supposed
to
shock
us
because
obviously
(!?)
a
swimming
pool
is
more
useful,
and
the
implication
is
that
more
Bitcoin
transactions
means
that
fewer
people
would
be
able
to
enjoy
aquatic
recreation.

Just
when
I
think
my
disappointment
with
mainstream
media
has
reached
its
peak,
I
find
that
there
are
always
new
heights
to
scale.
The
media
handling
of
de
Vries’
comment
has
been
egregious.

Almost
all
the
publications
that
picked
up
this
article
repeated
the
claims
verbatim,
without
questioning
the
source
of
the
data
or
the
author’s
track
record
(de
Vries
has
a
history
of
making
predictions
which
end
up
being
off
by
eye-watering

orders
of
magnitude).

Some
media
sources
blatantly
misstated
fact
–
the

BBC,
for
instance,
conflated
“payment”
with
“transaction”

in
their
headline.

Futurism
led
with
“The
Average
Bitcoin
Transaction
Wastes
a
Full
Swimming
Pool
of
Water,
Scientists
Say”
–
note
the
use
of
the
words
“waste”
and
“scientists.”
The

Independent
chose
the
unhelpfully
vague
“Bitcoin
consumes
as
much
water
as
all
the
baths
in
Britain,
study
claims.”
Pretty
much
all
reporting
confused
“study”
with
“comment”
–
the
former
tends
to
be
peer
reviewed,
the
latter
hardly
ever.
This
is
either
lazy
or
intentionally
misleading.

Mercifully,
a
handful
of
eloquent
individuals
with
a
hard-won
understanding
of
Bitcoin
mining
and
climate
issues
have
sprung
into
action,
detailing
the
errors.
If
you
don’t
already,
I
strongly
recommend
following

Daniel
Batten
and

Magdalena
(Mags)
Gronowska
on
X
–
two
analysts
with
plenty
of
industry
experience
who
have
done
the
relevant
research
without
bias
and
have
understood
the
potential.

Like
I
said
above,
it’s
up
to
all
of
us
now
to
fight
back
on
this.
It
shouldn’t
be
hard,
in
that
facts
are
on
our
side.
It
will
require
a
lot
of
effort,
though.
As
we
have
unfortunately
seen
over
the
past
few
years,
the
disinformation
machine
is
increasingly
powerful,
in
crypto
and
many
other
areas.
It’s
a
worthy
struggle,
though,
not
just
for
Bitcoin
but
also
for
science
and
a
pushback
against
what
increasingly
looks
like
a
post-truth
media
environment.